United Services Automobile Ass'n v. Superior Court

Introduction

United Services Automobile Association (USAA) filed a petition for a writ of mandate challenging the trial court’s determination that a sliding scale settlement agreement between the real parties in interest John Moore and his former attorneys Daniels, Baratta & Fine (DBF) was made in “good faith” pursuant to Code of Civil Procedure section 877.

We grant the petition. The consideration paid for the settlement consisted of a noncontingent $1 million and an interest-free loan of $3.5 million repayable only upon the contingency of its recovery from the nonsettling tortfeasor. Nevertheless, the settlement agreement provided that the value to be placed on all the payments of $4.5 million, for the purpose of establishing the credit to which the nonsettling defendant will be entitled, is only $1 million. In effect the settling parties agreed that the $3.5 million loan had no value to the settling plaintiffs. We hold that the settling parties failed to support this evaluation by substantial evidence. Therefore, the trial court erred in approving the settlement.

Background

On August 25, 1999, John Moore and Patricia Moore (the Moores) filed a complaint against…